The gold:silver ratio is the price of gold in ounces of silver. For those focused on dollar profits, it can also be thought of as showing the relative performance of gold versus silver. A rising ratio indicates that gold is outperforming silver and a falling ratio indicates that silver is outperforming gold.
The offer ratio is the gold ask price divided by silver bid price price, representing the rate to buy (or go long) the ratio, that is, buying gold and selling silver. The bid ratio is the gold bid price divided by silver ask price price, representing the rate to sell (or go short) the ratio, that is, selling gold and buying silver.
This shows the ratio of Monetary Metals’ Fundamental gold and silver prices. As with our Fundamental prices, the degree of divergence between the market gold:silver ratio and our Fundamental ratio is, in our opinion, an indication of market exuberance or pessimism.
Our Fundamental prices are computed according to a model based on our economic theory. We believe that this model reflects the forces of supply and demand in the physical market however there is no guarantee that the market ratio will move to the Fundamental ratio quickly or ever.
This chart shows the degree to which the market gold:silver ratio diverges from our Fundamental ratio. Positive values indicate that the market ratio is above our Fundamental ratio and this “premium” is shown in red as it reflects our opinion that the ratio may be overvalued (that is, the ratio will fall and silver will outperform gold in dollar terms). Negative values indicate that the market ratio is below our Fundamental ratio and this “discount” is shown in green as it reflects our opinion that the ratio may be undervalued (that is, the ratio will rise and gold will outperform silver in dollar terms).
3 Month Chart of Gold:Silver Ratio Prem/Disc to Fundamental
3 Year Chart of Gold:Silver Ratio Prem/Disc to Fundamental
Max Chart of Gold:Silver Ratio Prem/Disc to Fundamental
This chart shows the difference between the basis for gold and silver and the cobasis for gold and silver. When the Gold Basis to Silver Basis Ratio blue line is above 1 it indicates that the return from carrying gold is greater than the return that can be earned carrying silver, and below 1 silver offers the better carry return. When the Gold Cobasis to Silver Cobasis Ratio red line is above 1 it indicates that the return from decarrying gold is greater than the return that can be earned decarrying silver, and below 1 silver offers the better decarry return.